26 Oct 2022 09:46

Avdolyan's Elsi seeks to boost coal shipments by 1.1 mln t/month to finance Elga railway

MOSCOW. Oct 26 (Interfax) - Elsi Group, the coal mining company of Russian businessman Albert Avdolyan and his partners, has asked the authorities to grant it additional capacity to ship 1.1 million tonnes of coal per month for the next two years, promising to reinvest the resulting profits in accelerating construction of its own railway from the Elga coal field.

Avdolyan made the request in a letter to President Vladimir Putin at the beginning of October, and the government has been instructed to consider it, a source familiar with the letter told Interfax.

Elsi is prepared to launch the first phase of the project to build the rail line from Elga and a port on the Sea of Okhotsk in November 2024, Avdolyan said in the letter. The line will initially have capacity for 15 million tonnes, and a year later, by November 2025, capacity could be expanded to 30 million tonnes per year.

In order to finance the project from its own profits, the group needs to increase coal shipments eastward, including by 200,000 tonnes to 1.7 million tonnes per month from Elga, by 350,000 tonnes to 500,000 million tonnes from mines in Novosibirsk Region and by 30,000 tonnes to 250,000 tonnes per month from mines in Kemerovo Region, the source said, citing the letter. In addition, Elsi wants to be able to increase shipments from Siberia westward and within Russia by 500,000 tonnes to 1.85 million tonnes per month.

If these shipment volumes are reached, "Elsi Group guarantees the completion of the first phase of the project in November 2024 and the second phase in November 2025," the source said, quoting the letter.

Avdolyan's A-Property reached an agreement in September with Gazprombank and the Khabarovsk Territory to build a 500-km private railway, the Pacific Railway, near the Chumikan settlement in the Khabarovsk Territory to ship 30 million tonnes of coal from Elga to the Sea of Okhotsk. Investment will come to146.6 billion rubles. The bank will provide a bridge loan of 40 billion rubles initially.

The Elga coal deposit, located in Yakutia, is the largest in Russia and one of the largest deposits of coking coal in the world. It has JORC compliant reserves of around 2.2 billion tonnes. A-Property earlier assessed the cost of developing the deposit at 130 billion rubles.

According to the Unified State Register of Legal Entities, the Elga coal project is 80% owned by organizations that belong to Avdolyan and 20% owned by his new partner, Elgacoal LLC CEO Alexander Isaev, through Energogroup.